Can a lawyer hired to collect delinquent county taxes pay a layman a percentage of the amount collected without suit?

Plain-English summary

A lawyer held a contract with a county to collect delinquent taxes. The inquiry asked whether he could employ a layman to do clerical work and other efforts to collect the delinquent taxes by means other than filing suit, and pay the layman either (a) a percentage of the amount collected without suit, or (b) a salary based on a percentage of the prior month's collections.

All members agreed that payment by either percentage method is unethical (8-0). The Committee held it violates Texas Canon 30, which barred partnerships between bar members and nonprofessional persons where part of the employment consists of the practice of law, and Texas Canon 31, which provided that no division of fees for legal services is proper except with other lawyers based on a division of service or responsibility, or with a forwarding attorney.

The Committee noted that American (ABA) Canon 34 is substantially the same, and cited American Bar Ethics Committee Opinion 225 for the view that a lawyer's collection of claims and delinquent taxes without court action is the practice of law.

Currency note

This opinion was issued in 1957, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could the lawyer pay a layman a percentage of the taxes collected without suit?

A: No. The Committee held both percentage methods unethical under Texas Canons 30 and 31 (8-0).

Q: Why did collecting taxes without filing suit matter?

A: The Committee treated out-of-court collection of claims and delinquent taxes as the practice of law (citing ABA Opinion 225), so dividing the resulting fees with a layman was an improper fee division.

Q: Would paying the layman a flat salary instead change the result?

A: The opinion addressed only the two percentage-based methods presented and found both improper; it did not approve any alternative compensation arrangement.

Background and rules framework

The opinion interprets former Texas Canon 30 (no partnerships with nonprofessional persons where part of the work is the practice of law) and Canon 31 (no division of fees except with other lawyers or a forwarding attorney), and references American Canon 34. The modern analog is ABA Model Rule 5.4, which protects a lawyer's professional independence by restricting fee-sharing with nonlawyers and nonlawyer partnerships in the practice of law.

Citations and references

Rules of Professional Conduct:

• MR 5.4 (professional independence; sharing fees with nonlawyers), as the modern analog
• Texas Canon 30 (partnerships with nonprofessional persons)
• Texas Canon 31 (division of fees)
• American (ABA) Canon 34

Other opinions cited:

• American Bar Ethics Committee Opinion 225: out-of-court collection of claims and delinquent taxes is the practice of law

See also

• TX Ethics Op. 160: Lending Letterhead for Collections
• TX Ethics Op. 172: Fee-Split With a County Attorney

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-153/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_153.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

QUESTION PRESENTED

Is it a violation of the Canons of Ethics for an attorney who has a contract with the county to collect delinquent taxes to employ a layman to do clerical work and make other efforts to collect such delinquent taxes by means other than filing suit and pay such layman (a) a percentage of the amount collected without suit, or (b) a salary based on a percentage of the amount of taxes collected without suit the previous month?

18 Baylor L. Rev. 260 (1966)

UNAUTHORIZED PARTNERSHIPS - DIVISION OF FEES - EMPLOYING LAYMEN
An attorney under contract with a County to collect delinquent taxes cannot properly employ laymen to aid him in collecting such taxes without suit where the layman is to be paid a percentage of the amount collected without suit.

Canons 30, 31. A.B.A. Canon 34.

All members of the committee agree that payment by either of the percentage methods above set out is unethical, as violating Texas Canon 30 which provides: "Partnerships between members of the State Bar and members of other professions or nonprofessional persons shall not be formed or permitted where a part of the partnership employment consists of the practice of law," and also as violating Texas Canon 31 which provides: "No division of fees for legal services is proper, except with other lawyers, based upon a division of service or responsibility, or with a forwarding attorney."

American Canon 34 is substantially the same. Opinion 225 of the American Bar Ethics Committee was cited in support of the view that the collection of claims and delinquent taxes by a lawyer without court action is practicing law. (8-0)

Tex. Comm. On Professional Ethics, Op. 153 (1957)